Unlocking a pent-up demand: Shariah-compliant investment poses challenges for Islamic institutions
Muslims make up roughly 25 percent of the world’s population. Forty percent of the world’s fastest-growing countries have large Muslim populations. This rapidly-growing demographic has propelled Islamic finance and Shariah-compliant investing from a relatively esoteric asset class, when the modern banking system began to offer Shariah-compliant products in the 1970s, to today’s global industry, with total assets of approximately $2 trillion (€1.8 trillion).
While this currently represents a small share of the global financial industry, the rapid growth of wealth within the global Muslim community has led to an increased demand for Shariah-compliant financial products and services that is expected to continue for years to come. As the demand for Shariah-compliant life insurance (takaful) and pensions has grown, institutional investors need to acquire Shariah-compliant assets as they look to cater to the Islamic consumer.
The challenge facing Shariah-compliant in